View to the north from the top if the Trades District parking garage. Visible under construction is The Forge a technology center that the city of Bloomington is building with the help of a federal grant. (May 20, 2024)Sometime in the second half of 2026, a new 150-room upscale hotel could be open for guests in Bloomington’s Trades District north of 10th Street, just across from the parking garage.
That’s if all goes according to the plan laid out in a letter of intent (LOI) signed by Alluinn IU Trades District Hotel and Pure Development. The idea is for Alluinn/Pure to construct the hotel, at a cost of $35 million, on land to be purchased for $1.2 million from the city of Bloomington, through its redevelopment commission (RDC).
Approval of the LOI came at Monday’s regular meeting of Bloomington’s RDC on a unanimous vote. RDC member Sue Sgambelluri voted “an enthusiastic yes” and RDC president Deb Hutton gave it “a definite yes.”
Bloomington mayor Kerry Thomson was on hand to lend her support from the audience. About the proposal, Thomson said, “I think it brings a unique anchor to the Trades District.”
Thomson continued, “My vision of a fully active B-Line corridor that goes from Trades all the way down to Hopewell, that’s alive at every hour of the day.” Thomson added that she thinks the hotel will “magnetize” the Trade District.
The real estate deal calls for Tract 3 and Tract 4 to be purchased for $1.2 million, but paid in four installments starting only after the hotel has been open for 18 months.
Making the presentation on the city’s side at Wednesday’s RDC meeting was John Fernandez, who is vice president of The Mill, the non-profit that has was tapped over a year ago by the RDC to promote development of the Trades District.
On Wednesday, it was Charles Whittaker, with Alluinn IU, who represented the side of the developers.
The deal that was approved by the RDC on Wednesday was a joint proposal from two entities that had previously been competitors for the deal. In mid-March, Fernandez had brought to the RDC proposals from three different firms—Alluinn IU, Pure Development, and MHG Hotels.
At that point, Frehandez was poised to recommend that the RDC approve an LOI with Pure Development. But MHG made a revised pitch just hours before the RDC met. That led Fernandez to ask the RDC to give him time to work out the best deal for the city. Those conversations led Alluinn IU and Pure Development to join forces.
One key difference between the proposal that the RDC approved, and MHG’s competing offer, is the purchase of two tracts—Tract 3 and Tract 4, instead of just Tract 3.
Whittaker said the reason he wanted the additional tract was because he wants to put a high-end restaurant in the ground floor and still keep the height of the building at a manageable level.
Whittaker described his idea for the hotel like this: “It’s not going to be the Ritz-Carlton or the Four Seasons, but it’s going to be very nice,”
The zoning district for the land is mixed use Showers Technology (MD-ST), which which has a primary structure height limit of four stories, and includes hotel as an allowed use.
Even though the Alluinn/Pure proposal is to buy two tracts (Tract 3 and Tract 4), they offered just $1.2 million, compared to $1.35 million from MHG, which was proposing to buy just Tract 3.
When the RDC made the public offering for the tracts in June of last year, here’s how the asking prices broke down: Tract 1 (west of Rogers) $2,550,000; Tract 2 (east of Rogers just south of 11th Street) $2,050,000; Tract 3 (east of Rogers, north of 10th) $1,020,000; Tract 4 (east of Rogers, north of 10th) $560,000.
The four tracts are north of Bloomington’s city hall, and make up part of the 12-acre Trades District, which is a portion of the city’s larger 65-acre certified technology park.
For the real estate, MHG was offering $330,000 more than the asking price, while Alluinn/Pure was offering $380,000 less than asking. What tipped things in favor of Alluinn/Pure was Alluinn’s experience with upscale hotels that provide top-end food and beverage service and Pure Development’s general development experience, Fernandez said.
Fernandez said that MHG doesn’t have experience with really nice restaurants and food and beverage service.
The city’s “incentive package” for Alluinn/Pure amounts to around a half million dollars, Fernandez said.
That figure comes from adding the land discount of $380,000 to “interest” that could be calculated on the delayed payment on the real estate.
Fernandez said the incentive package should be considered in the context of additional revenue the hotel would generate. Fernandez tallied up a total of over $800,000 in fresh revenue from the following sources, in the first year after opening the hotel: 5-percent innkeeper’s tax; revenue to the TIF fund; 1-percent food and beverage tax; and the purchase of 150 parking permits in the Trades District parking garage at a cost of $113/month per permit.
In addition to Bloomington’s underserved hotel market, Fernandez said the planned hotel could help fill the need for more meeting space. Fernandez reported having met with an IU faculty member he described as very active in the commercialization of research startups in the pharma world. Fernandez asked him why none of the companies he had started were located in Bloomington. The first thing he said, Fernandez said, was “I don’t have anywhere to hold my meetings.”
The IU connection is a big factor fuelling Whittaker’s interest in the project. Now based out of Chicago, he described attending Indiana University as a freshman in 1988. Whittaker graduated with a degree in economics. “I never lost my love for Indiana University,” he said. In 2012, Whittaker was asked by Gerhard Glomm, chair of the Indiana University economics department, to come back and teach a class, something he enjoyed, Whittaker said.
The other capital partners for the project also have strong IU connections, Whittaker said. It’s not foreign money, he said. “They’re all tied to the university at some point…Most of them went here and their kids went here.”
About the name “Alluinn,” Whittaker said it is a Gaelic word that means elegant or sophisticated.
The timeline for completion of the project is two years after the closing of the deal, which is yet to come. That could mean the hotel would be open as soon as the second half of 2026.
| Alluinn IU & Pure Development Trades District Hotel | MHG Hotels | |
| Purchase Price | $1,200,000 | $1,350,000 |
| Intended Structure | Alluinn will engage Pure Development ,lnc. as Developer. The developer will be solely responsible for all construction, maintenance, repairs, and operations of the project. Developer shall be responsible for the project design and shall consult with The Mill on hotel architectural plans. |
MHG Hotels will act as developer. The developer will be solely responsible for all construction, maintenance, repairs, and operations of the project. MHG Hotels shall also be responsible for the project design and shall consult with The Mill on hotel architectural design.
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| Terms | $50k non-refundable deposit @ execution of binding purchase agreement; balance to be paid in four equal quarterly payments beginning with the first calendar quarter ending after the 18-month anniversary of hotel opening. Purchase includes Tracts 3 & 4. |
$75,000 non-refundable deposit @ execution of binding purchase agreement; $225,000 non-refundable deposit @ closing; balance due on 1 year anniversary date of hotel opening. Purchase includes only Tract 3.
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| Project Scope | ~$35m investment; 150 key upscale hotel | ~$35m investment; 150 key upscale hotel |
| Equity Capital | Alluinn + committed capital partners | MHG |
| Minimum LEED Silver or its equivalence | Minimum LEED Silver or its equivalence | |
| Project Financing | Commercial financing; 25 years, 70% LTV; 24 months I/O | Commercial financing |
| Project Agreement | W/I 60 days post-LOl execution | W/I 60 days post-LOl execution |
| Project Timeline | 24 months post-closing |
24 months post-closing – dependent upon city permitting
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| Hotel Management | RFP for 3rd party operator; Alluinn to apply for ‘soft brand’ |
MHG self-management MHG Hotels will self-manage a
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| Hotel Franchise | franchise i.e. Tribute by Marriott or Hotel Indigo by IHG. |
Marriott Autograph Collection or another soft brand hotel
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From left: Bloomington RDC members John West, Deb Hutton, Deborah Myerson, and Sue Sgambelluri. Randy Cassady participated via the Zoom video conferencing platform. John Fernandez, vice president of The Mill, is seated to Sgambelluri’s left. (May 20, 2024)
At the table are IU Alluinn’s Charles Whittaker and The Mill’s John Fernandez. Seated in the audience is Bloomington mayor Kerry Thomson. Behind Thomson is Bloomington’s director of economic and sustainable development, Jane Kupersmith. (May 20, 2024)This post was originally published on 3rd party site mentioned in the title of this site
